E-SIM’s bumpy ride begins to smooth out

Last year I wrote about the Apple-SIM and how in many ways it was testing the water for the later introduction of soft-SIMs. iPads were ideal as a test ground: they had low take up of cellular services anyway, and there was not the same dependence on CSP-subsidised distribution channels.

A year on, and the Apple-SIM has seen mixed success. The intention that it provided lower duration and more dynamic network access has been delivered by T-Mobile and Sprint in the US. But AT&T still lock the devices if users choose their service, and there are only a handful of CSPs worldwide playing ball and providing Apple-SIM support.

At this point in its development, that leaves me with three key questions about the future of e-SIM.

Were the CSPs right to largely ignore the Apple-SIM and weather the storm?

The FT wrote (paywall) on 21st July that Apple and Samsung were in talks with a group of major CSPs regarding standardizing the introduction of e-SIMs. The GSMA had previously standardized e-SIMs to be used within IOT devices, such as meters, traffic lights, and other industrial uses. The driver for the original standard really came from the different operating conditions for machinery: the replaceable SIM card isn’t well-suited for high moisture or vibrating environments, and the longer operating life of industrial equipment requires a soldered solution. However this latest initiative aimed to accelerate the standardization in the context of consumer devices and it now appears to be gaining ground.

It appears that e-SIMs are inevitable, for at least some of the market, and that ‘weathering the storm’ is probably not the right long term strategy. And to be fair, reading the FT article, in many ways it is the CSPs who are shaping up to lead this charge.

So, why, despite worries about e-SIMs spelling the end of contracts and leading to the dreaded ‘dumb pipe’ dystopian future, are CSPs apparently keen to support this new standard?

I find the answer incredibly refreshing. Just a small selection of the quotes from the GSMA site shows an increasing focus on the customer experience. Deutsche Telekom said, “What we want to achieve with e-SIM is simplicity and convenience for our end customers,” and KDDI, “Embedded SIM is a promising solution that brings delightful consumer experiences to our customers as well as ever-increasing roamers.”

So instead of a head-in-the-sand response regarding protecting contract terms, and locking in subscriber acquisitions, the answer is heavily focused on improving customer experience.

And rightly so. With physical SIMs, first there are the inconvenient aspects for the customer of logistics, waiting on postage, dealing with packaging and delivery. And when the SIM does arrive there is the non-consumer-friendly task of inserting these tiny cards into our devices. (In Apple’s case, using an impossibly small tool to help you do so!) I cannot imagine anyone mourning the loss of these tiny and cumbersome components.

So customers will benefit and CSPs are already behind the initiative. The device manufacturers only stand to benefit as well, by enabling an improved experience, and removing one of the few open ports required on the devices. (With e-SIM, wireless charging, cloud storage, and Bluetooth headphones, many manufacturers may opt to completely enclose their device chassis.) Overall it appears there are overwhelming arguments that e-SIMs are not only on the way, but there are convincing motives for all the stakeholders to support their introduction.

So what does it really mean for CSPs?

There’s going to be drag to the full introduction of e-SIMs: finally implementing instant provisioning; a long hard look at MSISDN as identity; number portability; perhaps an over-the top bring-your-own-voice set up; slow death of legacy devices and co-existing old-SIMs and e-SIMs; and so on.

Crucially, at the future heart of it all, the CSP will need a real-time infrastructure that enables some of the highly dynamic provisioning and charging.

What I find really exciting is the change in commercial dynamics that this will all bring about. CSPs won’t actually be stopped from offering 2 year contracts, but with the reduction in device subsidies, will anyone really want to sign up for such a plan? Even the acronym SIM (Subscriber Identity Module) originates from the historical understanding that all network users were subscribers; locked and contained in the old post-paid world.

The real-time infrastructure will eventually mean that the e-SIM is only a point of authorization to the network, and the plans the subscriber chooses can be entirely dynamic. Contrast this today to where there are discussions about which SIMs a retail provider like Apple chooses to stock and therefore what plans are offered in the store. If the customer can choose their carrier by e-SIM then they should certainly be able to choose their preferred services in a personalised and dynamic fashion.

If customers are now free to activate a service for a short period of time, without commitment, then the commercial dialogue becomes very different. They are truly customers and not always subscribers. CSPs can be successful if their customers choose to return for repeat business, because they received good value, and not because they are tied into a long post-paid contract.

There will be a focus on customers and engagement rather than acquisition or churn.

A year ago I wrote to “buckle your seatbelts” if Apple ever introduced a “game changing soft-SIM iPhone 7”. We still don’t know if Apple will really join the party – or even if it will be as soon as next year – but we can be sure that e-SIMs are on their way. Personally, I’m going to check my belt is fastened.